The Trial of German Major War Criminals

Sitting at Nuremberg, Germany
November 20 to December 1, 1945

Sixth Day:
Tuesday, 27th November, 1945
(Part 2 of 6)

[MR. ALDERMAN continues]

[Page 181]

3. The Austrian "Anschluss"

- "Anschluss" means a locking on to, I think; they "locked
on" to Austria - in its turn not only brought with it the
fulfilment of an old national aim but has also had the
effect both of reinforcing our fighting strength and of
materially improving our strategic position. Whereas up till
then the territory of Czechoslovakia had projected in a most
menacing way right into Germany (a wasp waist in the
direction of France and an air base for the Allies, in
particular Russia), Czechoslovakia herself is now enclosed
by pincers.

I wish the Tribunal would contemplate the chart a moment and
see that worm-like form of Czechoslovakia, which General
Jodl calls a "wasp waist in the direction of France," and
then he very accurately described what happened when Austria
was taken by the Anschluss, that the wasp waist was "now
enclosed in the pincers."

I resume reading:

"Her own strategic position had now become so
unfavourable that she was bound to fall a victim to any
attack pressed home with rigour before effective aid
from the West could be expected to arrive. This
possibility of aid was furthermore made more difficult
by the construction of the West-Wall, which, in contra-
distinction to the Maginot line, was not a measure based
on debility and resignation but one intended to afford
rear cover for an active policy in the East.

4. The bloodless solution of the Czech conflict in the
autumn Of 1938 and spring of 1939 - that is - the two
phases in Czechoslovakia - and the annexation of
Slovakia, rounded off the territory of Greater Germany
in such a way that it now became possible to consider
the Polish problem on the basis of more or less
favourable strategic premises."

I think it needs nothing more than a glance at the
progressive chart to see what those favourable strategic
premises were.

"5. This brings me, said General Jodl, to the actual
outbreak of the present War, and the question which next
arises is whether the moment for the struggle with
Poland, in itself unavoidable, was favourably selected
or not. The answer to this question is all the less in
doubt since the opponent who was, after all, no
inconsiderable one, collapsed unexpectedly quickly, and
the Western Powers who were his friends, while they did
declare war on us and form a Second Front, yet, for the
rest, made no use of the possibilities open to them of
snatching the initiative from our hands. Concerning the
course of the Polish campaign, nothing further need be
said beyond that it proved in a way which made the whole
world sit up and take

[Page 186]

notice, what up till then had not been certain by any
means; that is, what a high state of efficiency the
young armed forces of Greater Germany had achieved."

If the Court please, there is a long review by General Jodl
in this document. I can read on with interest and some
enthusiasm, but I believe I have read enough to show that
General Jodl by this document identifies himself fully with
the Nazi movement. This document shows that he was not a
mere soldier. In so far as he is concerned, it identifies
the military with the political, and the immediate point on
which I had offered the document was to show the
deliberation with which the Treaty of Versailles was
abrogated by Germany, and the demilitarised zone of the
Rhineland was militarised and fortified.

In one of Adolf Hitler's reviews of the six year period
between his ascendancy to power and the outbreak of
hostilities, he not only admitted but boasted about the
orderly and co-ordinated long-range planning. I bring up
again, if the Tribunal please, document L-79, which was
offered in evidence yesterday, as exhibit USA 27. That is
the minutes of the conference of the Fuehrer by Schmundt,
his Adjutant. In as large a staff as ours, we inevitably
fall into a kind of patoise or lingo, as Americans say. We
refer to this as "Little Schmundt." The large file that I
offered yesterday, we call "Big Schmundt."

At this point, I merely wish to read two sentences from page
1 of that document which we call "Little Schmundt. "One
sentence on page 1. It is found below the middle of the
page: "In the period 1933-1939 progress was made in all
fields. Our military situation improved enormously." And
then, just above the middle of the second page of the
English translation: "The period which lies behind us
has indeed been put to good use. All measures have been
taken in the correct sequence and in harmony with our aims."
One of the most significant direct preparations for
aggressive war is found in the Secret Reich Defence Law of
May 21st, 1935, which I offered in evidence yesterday, as
exhibit USA 24 and commented on sufficiently. I need not
repeat that comment. The law went into effect upon its
passage. It stated at the outset that it was to be made
public immediately, but at the end of it Adolf Hitler signed
the decree ordering that it be kept secret. I commented on
that sufficiently yesterday.

General Thomas, who was in charge of War and Armament
Economy, and for some time a high ranking member of the
German High Council, refers to this law as "the cornerstone
of war preparations." He points out that, although the law
was not made public until the outbreak of war, it was put
into immediate execution as a programme of preparation.

I ask the Tribunal to take judicial notice of General
Thomas' work, "A History of the German War and Armament
Economy, 1923 -1944," page 25. We have the volume here, in
German, so that anyone may examine it who wishes. I don't
care to offer the entire volume in evidence unless the Court
thinks I should. We do give it an exhibit number, exhibit
USA 35, but I should like to place it in the files merely as
a reference work implementing Judicial notice, if that is
practicable.

THE PRESIDENT: You want it simply for the purpose of showing
that General Thomas said that that law was the cornerstone
of war

MR. ALDERMAN: Yes.

THE PRESIDENT: That has already passed into the record.

MR. ALDERMAN: I want to say to counsel for the defendants
that it is here if they care to consult it any time.

THE PRESIDENT: Very well.

MR. ALDERMAN: I should have identified it by our number,
2353-PS.

This secret law remained in effect until September 4th,
1938, at which time it was replaced by another secret
Defence Law, revising the system of defence organisation and
directing more detailed preparations for the approaching
status of mobilisation, which 1 think was the euphemism for
war.

[Page 187]

These laws will be discussed more extensively in connection
with other sections of our presentation. They have been
discussed by Mr. Dodd in connection with the economic
preparations for the war.

The second Secret Defence Law I offer in evidence as our
document 2194-PS. It will be exhibit USA 36.

As to that document I only intend to read the two covering
letters, "Reich Defence Law, the Ministry for Economy and
Labour, Saxony, Dresden ; and 6th December, 1939, Tel." - I
suppose - "Telegraph, "52051. Long Distance, Top Secret."

THE PRESIDENT: Does this occur at the beginning Of 2194-PS?

MR. ALDERMAN: It should, yes, sir, unless my English
mimeograph is different from yours.

THE PRESIDENT: I don't think I have any letter introducing
it.

MR. ALDERMAN: Does it not start after that, "To the Reich
Protector in Bohemia and Moravia"?

THE PRESIDENT: Yes, that's right. I beg your pardon.

MR. ALDERMAN:

"Transportation Section, attention of Construction Chief
Counsellor Hitch, or representative in the office of the
Reich Protector in Bohemia and Moravia, received Prague,
5th September, 1939, No. 274. Enclosed please find a
copy of the Reich Defence Law Of 4th September, 1938,
and a copy each of the decrees of the Reich Minister of
Transportation, dated 7th October, 1938, RL 10.2212/38,
Top Secret, and of 17th July, 1939, RL/VL 1.2173/39, Top
Secret, for your information and observance, by order,
signed Kretschmar. 3 enclosures completed to Dresden,
4th September, 1939, signed Schneider, 3 enclosures.
Receipt for the letter of 4th September, 1939, with 3
enclosures, signed 5th September, 1939, and returned to
Construction Counsellor Kretschmar."

The whole point being that it was enclosing a second secret
Reich Defence Law under Top Secret cover.

I refer next to Indictment, paragraph IV (F) 2A. That
paragraph of the Indictment refers to four points: (1)
Secret rearmament from 1933 to March, 1935; (2) the training
of military personnel (that includes secret or camouflage
training); (3) production of munitions of war; (4) the
building of an air force.

All four of these are included in the general plan for the
breach of the Treaty of Versailles and for the ensuing
aggressions. The facts of rearmament and of its secrecy are
self-evident from the events that followed. The significant
phase of this activity in so far as the Indictment is
concerned, lies in the fact that all this was necessary in
order to break the barriers of the Versailles Treaty and of
the Locarno Pact and to wage the aggressive wars which were
to follow. The extent and nature of those activities could
only have been for aggressive purposes, and the highest
importance which the Government attached to the secrecy of
the programme is emphasised by the disguised financing, both
before and after the announcement of conscription, and the
rebuilding of the army, 16th March, 1935.

I have, if the Court please, an unsigned memorandum by the
defendant Schacht dated 3rd May, 1935, entitled "The
Financing of the Armament Programme (Finanzierting der
Ruestung). "As I say, it is not signed by the defendant
Schacht, but he identified it as being his memorandum, in an
interrogation on the 16th October, 1945. I would assume that
he would still admit that it is his memorandum. That
memorandum has been referred to but I believe not introduced
or accepted in evidence. I identify it by our No. 1168-PS,
and I offer it in evidence as exhibit USA 37.

I think it is quite significant, and with the permission of
the Court, I shall read the entire memorandum, reminding you
that the German interpreter has the original German before
him to read it to the transcript.

"Memorandum from Schacht to Hitler," identified by
Schacht as exhibit A, interrogation 16th October, 1945,
page 40. 3rd May, 1935 is the date of the memorandum.

[Page 188]

Financing of Armament. The following explanations are
based upon the thought that the accomplishment of the
armament programme with speed and in quantity is the
problem of German politics, that everything else
therefore should be subordinated to this purpose as long
as the main purpose is not imperilled by neglecting all
other questions. Even after 16th March, 1935, the
difficulty remains that one cannot undertake the open
propagandistic treatment of the German people for support
of armament without endangering our position
internationally (without loss to our foreign trade). The
already nearly impossible financing of the armament
programme is rendered hereby exceptionally difficult.

Another supposition must also be emphasised. The printing
press can only be used for the financing of armament to
such a degree, as permitted by maintaining the money
value. Every inflation increases the prices of foreign
raw materials as well as the domestic prices, and is
therefore like a snake biting its own tail. Our armament
had to be camouflaged completely till 16th March, 1935,
and even after that date the camouflage had to be
continued to a larger extent, making it necessary to use
the printing press (bank note press) from the very
beginning of the whole armament programme, though it
would have been natural to start it (i.e., the printing
process0 at the final point of finance. In the
portefeuille of the Reichsbank are segregated notes for
this purpose, that is, armament, of R.M. 3,775 millions
and 866 millions, altogether 4,641 millions out of which
the armament notes amount to 2,374 million, that is, of
issue 30th April, 1935. The Reichsbank has invested the
amount of marks under its jurisdiction, but belonging to
foreigners, in blank notes of armament. Our armaments are
also financed partly with the credits of our political
opponents. Furthermore, 500 million Reichsmark were used
for financing of armaments which originated out of
Reichsanleithe, the Federal Loans placed with the savings
banks. In the regular budget the following amounts were
provided: for the budget period 1933-34 -R.M. 750
millions; for the budget period 1934-35-R.M. 1,100
millions and for the budget period 1935-36-R.M. 2,500
millions.

The amount of deficits of the budget since 1928 increases
after the budget 1935-36 to 5 to 6 millions of
Reichsmark. This total deficit is already financed at the
present time by short-term credits of the money market.
It therefore reduces in advance the possibilities of
utilisation of the public market for the armament. The
Reichsfinanzminister (Minister of Finance) correctly
points out in his defence of the budget: "As a permanent
yearly deficit is an impossibility, as we cannot count
with security on increased tax revenues to balance such
deficit and any other previous debits, and as, on the
other hand, a balanced budget is the only secure basis
for the impending great task of military policy" - I
interpolate that evidently the defendant Schacht knew
about the impending great military task to be faced by
Germany - "for all these reasons we have to put in motion
a fundamental and conscious budget policy which solves
the problem of armament financing by organic and planned
reduction of other expenditures not only from the point
of receipt, but also from the point of expenditure, that
is, by saving.

How urgent this question is, can be deduced from the
following, that a large amount of cash has been started
by the State and Party" - it isn't just the State it is
the State and the Party - "and which is now in process,
all of which is not covered by the budget, but from
contributions and credits, which have to be raised by
industry in addition to the regular taxes. The existing
of various budgets side by side, which serve more or less
public tasks, is the greatest impediment for gaining a
clear view about the possibilities of financing the
armaments. A whole number of ministries and various
branches of the party have their own budget, and for this
reason have possibilities of incomes and expenses, though
based on the sovereignty of finance of the State, but not
subject to the control of the Finanzminister (Minister of
Finance) and therefore also not subject to the control of
the cabinet. Just as on the sphere of politics the much
too far-reaching delegation of legislative powers to
individuals brought about various states within the
State,

[Page 189]

exactly in the same way the condition of various branches
of State and Party, working side by side and against each
other, has a devastating effect on the possibility of
finance. If on this territory concentration and unified
control is not introduced very soon, the solution of the
already impossible task of armament finance is
endangered.
We have the following tasks:

1) A deputy is entrusted with, I suppose, finding all
sources and revenues, which have origin in
contributions to the Federal Government, to the State
and Party and in profits of public and party
enterprises.

(2) Furthermore experts entrusted by the Fuehrer have
to examine how these amounts were used and which of
these amounts in the future can be withdrawn from
their previous purpose.

(3) The same experts have to examine the investments
of all public and party organisations, so as to
determine to what extent this property can be used for
the purpose of armament financing.

(4) The Federal Ministry of Finances is to be
entrusted to examine the possibilities of increased
revenues by way of new taxes or increasing of existing
taxes.

The up-to-date financing of armaments by the Reichsbank,
under existing political conditions, was a necessity, and
the political success proved the correctness of this
action. The other possibilities of armament financing
have to be started now under any circumstances. For this
purpose all absolutely nonessential expenditure for other
purposes must cease and the total financial strength of
Germany, limited as it is, must be concentrated for the
one purpose of armament financing. Whether the problem of
financing, as outlined in this programme, succeeds,
remains to be seen, but without such concentration it
will fail with absolute certainty."

Being a sort of a hand in finance himself, I can feel some
sympathy with the defendant Schacht as he was wrestling with
these problems.

May 21st, 1935, was a very important date in the Nazi
calendar.

THE PRESIDENT: Would that be a convenient time to adjourn
for ten minutes

MR. ALDERMAN: Yes.

(A recess was taken)

MR. ALDERMAN: 21st May, 1935, was a very important date in
the Nazi calendar. As I have already indicated, it was on
that date that they passed the secret Reich Defence Law,
which is our document 2261-PS. The secrecy of their armament
operations had already reached the point beyond which they
could no longer maintain successful camouflage and since
their programme called for still further expansion, they
made the unilateral renunciation of the armament provisions
of the Versailles Treaty on the same date, 21st May, 1935.

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